Prior to the Transportation Committee meeting Secretary
Bailey, Transportation Cabinet, conducted a tour of the Cabinet's new
facility. The tour consisted of the Cabinet's Operation Center and its
auditorium.

Representative Collins moved to approve the Committee's
minutes from its June 21, 2004 meeting, as submitted. Senator Scorsone
seconded the motion, which passed by voice vote.

Secretary Bailey, Transportation Cabinet, opened the meeting
by welcoming the Committee to the Cabinet's new facility. He said stated that
the facilities' meeting rooms, as well as its auditorium, was open to other
state agencies for their use and encouraged any agency to do so. He stated
that there was no charge to state agencies for use of the meeting rooms.

David Garnett, Executive Director, Kentucky Motor Vehicle
Commission, testified in favor of 605 KAR 1:060 (Permits for temporary car
sales), which was deferred from the Committee's last meeting at the request of
Mr. Garnett. After a brief discussion Representative Collins moved to approve
605 KAR 1:060. Representative Pasley seconded the motion, which passed by
voice vote.

At this time Chairman Moore turned the meeting over to
Chairman Collins for a discussion of the charges charged various entities
(automobile dealers, banks, insurance companies, etc.) for the use of the AVIS
system. Mr. Lee Searcy, Kentucky Automobile Dealers Association (KADA) and Joe
Goodman, an auto dealer in Glasgow, Kentucky, testified on this subject. Mr.
Searcy said that the change in the way members are charged for use of the AVIS
system is the result of Kentucky's new internet home page
"Kentucky.gov", operated under contract by Kentucky Interactive,
Inc. Prior to the change when the Cabinet maintained the site, clients were
charged a yearly fee of $125, which enabled that client unlimited access to the
system anytime throughout that year. Now, Mr. Searcy said, under Kentucky.gov,
clients are charged a $125 yearly fee, as well as $1.00 every time that client
uses the system throughout the year. Mr. Searcy said it is his understanding
that the breakdown of the money collected is that the Cabinet receives $25 of
the $125 subscription fee along with fifty cents of each dollar collected, with
the Motor Vehicle Commission receiving the remaining $100 of the subscription
fee and ten cents of each dollar, and Kentucky Interactive Inc. receiving the
remaining 40 cents of each dollar. Mr. Searcy commented that there are over 240
dealerships in Kentucky and KADA estimates the Transportation Cabinet should be
receiving around $395,000 from both the yearly fee and the $1.00 fee per hit
combined.

Mr. Searcy said several years ago KADA worked with the
Transportation Cabinet to develop a means for automobile dealers to access
AVIS. He said that KADA then helped promote the system to its auto dealers.
At that time, Mr. Searcy stated, the Cabinet assured KADA that the fee for the
access would be minimal, and in fact, the Cabinet set the original yearly fee
at $250. He stated that the $250 yearly fee was lowered the next year to $125
and had remained at the $125 amount until Kentucky.gov took over the program.

Mr. Searcy said KADA was not notified or asked for their
input prior to change of the access to AVIS and feels the Cabinet took
advantage of their assistance. He said that under no circumstances would KADA
have promoted such a costly system to its automobile dealers.

Mr. Goodman, an automobile dealer in Glasgow, Kentucky,
testified that he used the system prior to Kentucky.gov but cancelled it when
he learned of the additional dollar fee per access. He said that he estimated
that his dealership, which is a medium size dealership, used the prior system
approximately 200 times a month, which would have cost him around $2,525
annually to access the system. Mr. Goodman said that he could not justify the
extra cost when his people could acquire the same information from the county
clerk's office. He said the information would take longer to receive, but he
preferred going back to the old way of collecting the information as opposed to
paying $2,000+ a year.

Senator Borders asked what type of information dealerships
needed. Mr. Searcy said that buyers were notorious for coming into a
dealership to buy a new car without having the title of the car they wish to
trade-in, so a title was the most sought after information. He said
dealerships also use the AVIS system to see if a car has been branded, such as
for salvage purposes.

Representative Butler asked if Mr. Searcy knew how the time
period of the Kentucky.gov contract. Mr. Searcy said he understood the
contract was good for 10 years. Representative Butler said that in this day
and age, with computer technology changing daily, he thought a 10 year contract
of this kind was ridiculous.

Representative Marcotte asked Chairman Collins if the
Committee could find out how much revenue is generated by this AVIS system, how
it is distributed, and how the state agencies are using the funds they receive.

Representative Weaver asked how much the original operation
cost the Transportation Cabinet, and how much money they received for that
system's use as opposed to what they are now receiving under Kentucky.gov.
Deputy Secretary Murgatroyd was unable to offer specifics, but said he would do
so at the Committee's next meeting, if the Chair so wished. Chairman Collins
indicated that the Committee would like to receive the information at its
August meeting.

Representative Pasley asked what other information could be
acquired from the AVIS system. Mr. Searcy said tax collection and title
information was available on the system and indicated there were presently
around 3 million registered automobiles in Kentucky.

Senator Sanders stated that it seemed to him that under the
new system dealerships would have little interaction with the Cabinet and he
thought it should be the exact opposite, that there should be an open line of
communication between the Cabinet and dealerships.

Chairman Collins turned the meeting back over to Chairman
Moore for the Committee's last discussion - implementation of 2004 House Bill
29. Mr. Eddie Deskins, Director and Willie Payton, Division of Motor Vehicle
Licensing, Transportation Cabinet, offered testimony on this subject.

Mr. Deskins informed the Committee that the Cabinet was
still in the process of looking into how other states collected their insurance
information. He said the Cabinet is currently doing an in-depth research into
three different ways - (1) insurance companies must submit their total auto
insurance information monthly; (2) insurance companies must submit their
original insurance information and then report cancellations and new members
monthly, or (3) insurance companies must submit their original insurance
information and then report any changes monthly. Mr. Deskins noted that the
Cabinet is currently leaning towards the third choice, i.e., having insurance
companies transmit their original insurance information and then only report
changes each month. He said that he envisioned such a process could easily be
checked against the Cabinet's AVIS system.

Representative Rand commented that this would be a nightmare
for insurance companies and asked if there were any funding attached to the
legislation. Mr. Deskins said no, House Bill 29 did not stipulate any funding
and that the legislation takes effect January 1, 2006, so they have time to
work with the insurance companies.

Representative Rand asked how many other states were
collecting such insurance information. Mr. Deskins said around 28 other
states.

With no further business before the Committee the meeting
adjourned at 2:45 p.m.